Austin uniformly
represents what is best in America. Beautiful and diverse
scenery,
hills
and lakes, comfortable weather, multicultural outlook, enthusiastic
business climate
all help make Austin a fabulous place to
live and
work. Many other lesser known factors contribute to Austin's
value;
for example, did you know that that each year, the film
industry infuses millions of dollars into Austin's local
economy?

But wait, you
say: Is the time right to invest in Austin?

See for yourself
in the following chart: Austin shines brightly enough that Austin area
home values have held up well through the stock market difficulties,
tech
industry layoffs, and the aftermath of September 11th.

None of us can
predict the future or can accurately assess the effect of current
economic
conditions. But you can use historic data as a tool to help
determine
where you might best invest. Although I have no crystal ball
to tell
you how your investment will fare here or anywhere else, Austin's long
term real estate history shows that Austin has been a fine place to own
property. Currently, sales are up significantly (see chart
below)
and Austin has more inventory than it has had in years; the frenetic
pace
of sales has moderated enough to where some investors are finding
excellent
buys. Following are some examples of recent years'
appreciation in
the the Austin area:

On
the following chart, note the dramatic increase
in numbers
of sales running up to 2006. 2007 started strong, showing
potential
to outpace 2006. Then the mortgage crisis hit.
September 2007
shows the sharp drop in sales. The good news is that 2008 is
running
close to our average year of 2004.

Chart courtesy Alamo Title Company

Want to see
supply and demand
at work? On the following chart, note the dramatic
increase
in sold prices and the decrease in inventory during
2005 and 2006.

In 2001,
after ten years of strong appreciation, Austin's housing market so
heavily
favored sellers that buyers felt they had to jump on the next
acceptable
property that came on the market. Buyers worried they'd be
priced
out of the market. Then from
2001 to 2003, as in many
fine cities, Austin homesellers found themselves confronted with four
economic
realities that affected home sales:

The dotcom
bust

High
tech layoffs

Stock
market bust

Post
9/11 economics

One would have
expected numbers of sales to drop off. Yet, in Austin, sales remained remarkably
consistent. While numbers of listings went up,
numbers of sales
stayed the same, easing pressure on buyers to buy the first home they
saw.
The result is that upward pressure on prices disappeared, and prices
remained
almost flat. 2008 sales have been down, now inventory is
up.
Sale prices are stabilizing: Given Austin's appreciation history and
the
continuing economic growth here, this is an excellent time to
buy.

Source: Austin Board of
Realtors

National
Business Experts Promote Austin as Among the Best in the Nation

Nationally respected
professionals have each done their own research and unanimously
conclude
that Austin is indeed a very fine place to live and to do business.

#1 best
place for families,Employee
Relocation Council (ERC) and
Primacy Relocationhttp://sev.prnewswire.com/television/20041029/CLF05529102004-1.html"Austin has done it
again," said
Matt Spinolo, Primacy's CEO. "It's already ranked number one for
relocating
families. Now it seems that Austin is the best city for transferees
with
or without a family." ERC and Primacy produced a related survey this
past
May, naming the Best Cities for Relocating Families.

Insider
News Report:This just in
from the Neal Spelce Austin Newsletter, www.austinnewsletter.com):

"The US Department of Commerce
(headed
up, incidentally, by Texan Don Evans) crunched the
2002 numbers
and found that Texas has become the nation's leading
exporter--surpassing
the other giants, New York and California. In 2002, the Lone
Star
State accounted for a significant 13% of all exports.

For years we've told
you how Texas
has been affected more and more by global affairs. Long gone
are
the days when cotton and cattle drove our economy. But it's
only
been in recent years, when Texas has become a major business and high
tech
center, that products produced in Texas become heavily
reliant on world
markets."

This means that that
Texas continues
to diversify its economy, which is good for Austin investors.

First time
visitors are often pleasantly amazed with the unexpected variety in
local
terrain within 30 minute drives around town. Geographically, Austin is
split vertically by the Balcones escarpment, yielding lakes and cedar
covered limestone hills to the west and flatter
farmlands of black clay to the south and east. Austin is
also bisected
horizontally by lovely Lake Austin, formed by the Colorado River. The
following
neighborhood characterizations are generalizations, with some semblance
to the truth
. . .

Typical
Austin Neighborhoods
(click on pictures and links for examples)

South
Austin, affectionately known to include counterculture and
artistic
types, is home to many famous and not-so-famous musicians. Austin's
well
deserved reputation as the Live Music Capital of the World
is evidenced
by the highest per capita number of live music venues, most of which
are
close to downtown.

North
Austin, along with close neighbors Cedar
Park/Leander, Round Rock and Georgetown is more mainstream.
North Austin
is home to Dell Computers and tech companies like IBM, and has a
mixture
of more affordable homes and premium properties, depending on how far
west
and how close homes are to the hill country.

West
Austin is situated at the edge of the Texas Hill Country
features a
dramaticchange in terrain. Many
homes are
situated on the sides of steep limestone hills, enjoying stunning
views.
Property values are high for Texas, but still bargains compared to
other
states.

East
and
Southeast
Austin are the most affordable areas. For years, Austin's airport was
located
in east Austin and stunted its growth. Now with a brand new airport
southeast
of Austin, east Austin is being revitalized.

Where is
the best part of Austin to invest? Inner city neighborhoods of fine old
properties are good for appreciation, suburban areas are better for
cash
flow. Suburban areas are where one finds modern homes that have fewer
maintenance
problems.

Inner city
properties are fine for local investors who can
easily oversee maintenance
and improvement issues. Out-of-town
investors are probably better off with much newer
buildings, which
are mostly located in suburban neighborhoods.

Historically
in Austin, the short-term investor usually must
hold a property
at least two years before recovering equity in a sale.

The long-term
investor (at least 8 years) does well to choose neighborhoods
where
growth is prominent, where some infrastructure is still in development,
and where rents are high enough to support the sales price and cover a
significant part of the monthly payment.

For
Those Who Want to Visit Austin

Many investors
want to visit Austin to get the "lay of the land" and to see what they
are actually buying. I welcome these visits and I usually
spend the
better part of a day with them. To see what investors have
said about
this tour, click
here:

The investor
tour is a rolling mini-seminar in my car, starting downtown and lasting
from about 10:00 am to 3:30 pm. This gives you plenty of time
to
catch a flight back home in the afternoon.

During our
time together, we visit neighborhoods with the current best matches to
investor criteria. You get a comprehensive view of business
sectors
in Austin, and an understanding of where Austin is growing and
why.
You also get to meet with the property manager, with whom, over the
next
several years, you will be spending much more time than with
me.

The best
day for a tour is Wednesday, Thursday, or Friday.
Saturday
is fine for seeing property, but you won't get to meet with the
property
manager, which is important. On Sundays and Mondays,
subdivisions
are not open until after lunch, and you won't have time to see the
choices
otherwise available to you. Therefore, Sunday is my day off.

Typically,
an investor arrives in Austin in the evening and relaxes at one of
several
reasonable hotels (I have a list I can email you). Some like
to stay
right downtown so they can walk around and enjoy the local music and
entertainment
scene. When you arrange a tour with me, I can pick
you up at
your downtown hotel the following morning, about 9:30 am.
Alternatively,
you can plan your trip to fit into just one day, arriving in Austin
about
8:00 am. When arranging a visit and tour, three
weeks notice
is usually sufficient.

Oftentimes
multiple investors have scheduled a visit on the same day. In
that
case you'll be riding with other investors, which makes for a lively
experience,
each one having different questions that everyone benefits
from.
My car seats four passengers. Occasionally, when we can't all
fit
into my car, the visitors who follow me in their rental car can hear
the
play-by-play with a set of walkie-talkies I have available.
We try
to make this work for everyone.

By
the end of the tour, most investors are saturated with information;
most
often they want to take a day or so to figure out which properties they
want. Then, it's first come, first serve. You don't need to
worry
too much about another investor getting the house you want if you are
ready
to make a quick decision.

Disclaimer:
All information is deemed reliable
but not guaranteed and should be independently
verified. Listing
broker shall be responsible for any typographical errors,
misinformation,
misprints and shall be held totally harmless.

Leverage is multiplying your gain by investing a small amount
of money
in an asset that is worth much more than the initial
investment.
Typical investments in stock and bonds do not use leverage.
For example:

Not using leverage:
Invest $30,000 in stocks that yield 5%. Your return is $1,500
(5%
return on $30,000).

Now Let's say you invest
just enough money in a rent house so that the rentals pay for overhead,
and let's say your property appreciates at, say 5% per year; then you
receive
a much greater return than if you get 5% only on the amount
invested.
Illustrating the concept of leverage at its simplest:

Using leverage:
Invest
$30,000 in a $150,000 property that appreciates at 5%. The
return
is $7,500 (5% of $150,000). This is equivalent to
a 25% return
on the $30,000 investment.

That's the leverage
concept. The actual return is less when considering operational and
sales
expenses; however, return can be quite a bit more when appreciation is
higher. And holding property for several years can produce
astounding
results due to compounding appreciation.

Tax savings are achieved by writing off expenses and
depreciation.
For example, say you have a $150,000 property you bought with 20% down
and a $120,000 mortgage. The following figures are a greatly
simplified
estimates used for illustration purposes only, are subject to change,
and
are intended only to give you a glimpse of the possibilities.
YOU
MUST CONSULT YOUR CPA FOR ACCURATE TAX ADVICE.

Yearly
Interest

$
7,800

Yearly Insurance

$ 650

Yearly Taxes

$
3,765

Yearly Management
fees

$
936

Rental charges

$
780

Depreciation

$
4,364 (paper
loss)

Total annual
write-offs

$18,295
($13,931 actual
losses)

Rental
income (11
months)

$14,300

IRS
sees a loss

$ 3,995

Gain
before
appreciation

$
369

After
tax cash flow

$ 1,569 (not including
appreciation!)

What does this
mean to you tax wise? It means that you could afford to lose
$1,569
and still have a break even cash flow after taxes. It also
means
that although you may have made money, IRS sees it as a loss, reducing
your taxes. So the money you would normally spend to
pay taxes
actually helps pay for your asset.

Note that the
rental income with one month of vacancy is $369 greater than the
expenses,
pretty much a break even cash flow before taxes. A wonderful
benefit
comes after tax: Because IRS allows you to depreciate the property,
your
after-tax cash flow is a negative $3,995, a net loss that reduces your
income tax. The example does not take into account repairs,
which
you need to figure in; the good news is that they can be minimal on new
properties.

Are you in the
30% tax bracket? If so, for every additional dollar or thousand dollars
you make, 1/3 goes to IRS. Every additional $4,000 you make,
$1,200
goes to IRS. But if you have a net loss of $4,000 IRS looks
at it
as if you have $4,000 less income. This would mean a tax
savings
of $1,200. So if you own more properties, you could save
thousands
in taxes, the properties could pay for themselves, and you could get
appreciation
on multiple properties instead of just one. Is it starting to
get
fun now?

Would you like
more positive cash flow? We need to talk. Call me
and I'll
show you how.

Once again, Gordon and
I thank
you for the well-organized, information-packed tour of Austin real
estate,
in addition to your thorough follow-up in getting us the Plum Creek
addresses.
You are the reason for our very successful trip to Austin, and we
appreciate
all of your hard work.

********Erica and I would
like to thank
you for your very informative tour of Austin Real estate.

********

Again, thank
you for your time
and energy on Saturday. The tour was veryinformative and
surprisingly
enjoyable. I loved Austin. My friend and Iwent to
Barton Springs
for a swim on Sunday before we caught theplane
back. We stayed at
a B&B, the Miller Crockett houseon Academy, one
block off Congress,
and heard very good music Saturday nighton Sixth and also
at a small
club on Congress right were we were. It was afabulous business
trip.

********Thank you so much
for the tour
of your beautiful city last week. I look forward to working with you. I
must say you were the best prepared and the most knowledgable realtor I
met with in my tour.

********I have now met 5
[investment]
realtors, and others would do well to learn from you. It's
amazing,
but some don't even give clients a map during the whole tour!

********"Tom does an
excellent job of
showing the potential for real estate investment in Austin. His tour
style
of including multiple investors creates a synergy that I have not found
when doing one-on-one visits with realtors in other marketplaces. The
candor
among the investors I spent the day with brought to light questions I
would
have never have thought to ask on my own..."

Q:
Why single family homes?A: A quality single family
home
is easier to rent and to sell than any other kind
of real estate.
As a rule, renters would rather live in a home than in a duplex,
triplex,
or fourplex. While multiple rental units sell mainly to
investors,
single family homes sell to homeowners, who vastly outnumber
investors.
With single family homes, your investment portfolio is scalable and
your
are able to diversify easier within a community or
nationwide.

Q:
Why new homes?A: Value.
The
homebuilders we work with are able to sell new homes for less than
individual
homeowners with similar properties for sale. Plus, you get
the benefit
of full term warranties. There are fewer
maintenance costs
and headaches. And, given a choice
between new and used, a
tenant will choose new every time. This means higher rents
and less
vacancy.

Of course, as
years go by, your property will gradually show wear and you will get
gradually
lower rents compared to shiny new homes. Yet your rents
should still
be higher than if you bought a used home to start with, as an older
home
would be even more out of date and show even more wear. If
you buy
in an area that is appreciating in value, then rents should be
appreciating
as well, contributing to a more positive cash flow.

Q:
Why single story homes?A: One story homes have
fewer limits
than two story homes. A prospective tenant does not have to
choose
between "master up" or "master down." One story homes generally have a
larger "footprint" on the lot, which means less yard maintenance for
the
tenant. Plus they are easier for tenants to move in and out
of.

Q:
What areas make up "Austin?"When the media mentions
Austin,
they usually are referring to the Austin metro area
(pop. 1.3 million).
Also known as "greater Austin," or most often simply
"Austin,"
this area includes, but is not limited to the Austin city limits which
are known as "Austin proper" ( pop. 656,000).

Greater
Austin includes five
counties, three of which are in the top 100 fastest growing counties in
the nation (http://www.census.gov/popest/counties/CO-EST2004-09.html)

The following popular
communities
are in these three fastest growing counties: Leander,
Cedar Park,
Round Rock, Georgetown, Hutto, Pflugerville, Manor, Buda, Kyle, and
Dripping
Springs.

Interestingly, "Austin
proper"
is
not in one of the top 100 fastest growing
counties.

Q:
How do I know a neighborhood is good for investment?A: If a neighborhood has
good access
to shopping, schools, and if it looks nice, it can be a good
candidate.
The rents must support the sales price. We have tools to
obtain rental
history to help with your selection. For more information, click
here.

Q:
What upgrades should I choose?A: At a minimum, you should
require
a fenced yard that has been landscaped and sodded on all four sides; it
should include an automatic lawn irrigation sprinkler system.
Interior
should include ceramic tile floors and upgraded carpet pad for
durability,
also ceiling fans for comfort. Such upgrades will help
preserve the
quality of your investment and make it easier to rent. We
have negotiated
special upgrade packages for our investors so that the home is turnkey
ready for rental and move in the day of closing.

Q:
How do I choose a lender?A: Three basic
choices: Local
Austin lender, builder's preferred lender and your existing lender (if
you have one.)

My preferred
local Austin lender is Cheryl Darter of Colonial
Savings.
She can get a loan approved on one day. In fifteen years,
Cheryl
has never let me down. She will quickly provide you with a good
faith settlement estimate, a form that spells out your
closing costs.
Contact info: (512) 904-1191; email is cheryld@colonialsavings.com
. Her online application is http://www.cnmcs.com/cheryldarter
.

Most
homebuilders have a business relationship with a local lender. Larger
builders
actually own lending institutions that make them money.
Builders
sometimes offer incentives for you to use their preferred
lender.
If you choose to go this route, you might consider getting a quote from
another lender to satisfy yourself that your rate and fees are
acceptable.

Your
existing
lender: There may be some overhead here, as an out-of- state
lender
who does not regularly loan in Texas may have difficulty getting you
the
best financing. They also don't know who the best and fastest
appraisers
are and don't have relationships with the local title companies, which
can cost you. If you like
your existing lender,
I would encourage you at a minimum to compare good faith settlement
estimates
between them and at least one of the above two lenders to help ensure
you
are getting the best rate and terms.

Be sure to discuss insurance requirements with your lender.
Some
lenders require loss
of rent coverage in case property damage forces the tenant
to vacate.
Such coverage can substantially raise the cost of insurance.

Q:
Can other investors go in with me to buy the same property?A: Yes. You will
need to meet
your lender's requirements. You should consider entering into
some
sort of a partnership agreement. These can get
sticky: I recommend
legal counsel by a Texas lawyer.

Q:
What about LLC (limited liability corporation)A: My understanding is that
an LLC
must have income and assets in order to qualify for a loan.
Some
investors have attempted to personally qualify and then put the
property
into an LLC after closing. I don't know if anyone has been
successful.
One lender told me that title transfer into an LLC requires the named
insured
to change; when the lender discovers this, it can trigger the
due-on-sale
clause in the deed of trust, resulting in foreclosure proceedings even
if payments are current. I don't know if this is true, but
the point
is, there can be pitfalls. Before entering into a contract,
you should
consult with your lender and a Texas lawyer.

In addition,
Texas has specific requirements (such as franchise tax requirements)
that
I'm not qualified to discuss. If liability is a concern to
you and
LLC turns out to be too cumbersome, attorneys can inform you on the
nature
of liability with respect to Texas law and perhaps suggest alternatives
to satisfy your concern. I recommend legal counsel by a Texas
lawyer,
such as H a n c o c k - M c G i l l (
512-459-6010) or R
o d n e y S h e p p a r d (512-472-3966).

Q:
How do I find a good tenant?A: You want to get a lot of
exposure
so that you can attract the best tenants. You get the most exposure
utilizing
the Austin Multiple Listing Service (ACTRIS). Your property
manager
should be an ACTRIS subscriber.

Q:
How long does it take to find a tenant?A: As of April 2006, Austin
area
lease homes averaged 61 days on market. There was a 50%
increase
in numbers of leases from a year ago, with an average lease price of
$1153/mo.,
6% higher than a year ago. Anecdotal evidence shows that the
majority
of lease applications are from folks moving to Austin. This
is quite
different from just a couple of years ago, when most leases were to
Austin
tenants moving within the area.

When reviewing
such statistics, keep in mind that averages don't tell the whole
story.
The rental market is affected by regular seasonal changes as well as
with
less predictable economic factors. Factors such as local
neighborhood
supply and demand can affect both how long it takes to lease and how
much
you get. It's possible that you may have to lower the rental
offering
price below your expectations and/or offer incentives.
Although the
market shows impressive signs of strengthening, you need to have enough
money in reserve for weak markets. Also, it's a good idea to
develop
and maintain a relationship with a competent and busy property manager
to help stay up-to-date on the rental market.

Q:
Who manages the property?A: I like the old saying,
" You
never really know someone unless you're married to them or rent to
them."
If
you are not interested in handling maintenance calls day in and day
out,
you might consider hiring a professional property manager. Property
managers
charge 7-10% of the monthly rents for management and a percentage of
the
first month's rent to lease the property. We've been
referring tenants
to Sienna Properties (Debbie Smith) at 512-328-0600. Click on
their
website.

Q:
Is
an inspection really necessary on a new home? Should I use
the builder's
inspector?A: Good question. Two case
histories,
you decide:

1. I represented
a seller who, before I met them, had bought a new home from a reputable
builder. After 2 1/2 years living there, they asked me to
help them
sell the house. After we got a contract, the normal buyer's
inspections
revealed some electric outlets had reversed wiring and the exterior
windows
were installed inside out. The seller contacted the builder
to correct
the problems. The builder declined, saying they would not
have made
mistakes like that, saying the seller must have altered the home, and
saying
anyway it was out of warranty. Repairs were in the hundreds
of dollars,
and the seller, not the builder had to pay.

2.
I represented a buyer who bought a new home from a reputable
builder.
This buyer had inspections, which revealed the water heater
installation
did not meet code and presented a safety hazard. The builder
begged
to differ, but upon checking, found that the inspector was
right.
Consequently the builder moved the water heater, and felt obligated to
correct other similar installations in the subdivision. Had
this
one inspection not been performed, not only my buyer, but all similar
homeowners
would eventually have been presented with similar inspection reports,
likely
long after warranties expired, and probably having to foot the bill to
correct the hazard.

Texas law prohibits real estate agents from performing home
inspections.
The most thorough home inspectors are licensed by the State. I
recommend
that you have a professional inspection performed to protect your
investment.

If you choose
to have an inspection done, there are dozens of licensed inspectors in
Austin. Technically, it is your choice and your
responsibility
to choose and retain an inspector. Because you are probably
not an
Austin resident, I can help you set up inspections. I've
negotiated
a discount for our investors with one inspector. If you are interested
in this, let's discuss it.

Builders sometimes
provide inspectors for free. In my experience, these
inspectors'
scopes are determined by the builder and with emphasis on cosmetic
issues.
Such an inspection is most often not as thorough as one you would get
with
an independent inspector.

Q:
What should I do about insurance?A: You need to discuss
desired coverages
with your insurance agent as soon as you have contracted to purchase
your
property. Because of recent substantial changes in insurance
policies,
procedures, and costs, it will serve you well to sustain a relationship
with a knowledgeable and involved insurance agent. One such
agent
is Ray Garner of G-N-S Insurance Services, Austin, Texas.
Ray's phone
number is 512-281-5150.

Be sure to discuss insurance requirements with your lender.
Some
lenders require loss
of rent coverage in case property damage forces the tenant
to vacate.
Such coverage can substantially raise the cost of insurance.

Q:
What do I get when I work through you?A: You get caring and
knowledgeable
service. If I represent
you, you get advice and counsel beyond information. I would
hope
that if you've read the above and reviewed the rest of this website,
you'll
conclude that no one is more qualified
and no one works more enthusiastically to provide accurate and
meaningful
information.

I bring to your
transaction twenty-five years of helping folks buy and sell Texas real
estate. Daily, I continue to learn what to do and what not to
do.
Plus, the years invested while ascending to the office of Chairman
of the Austin Board of Realtors has brought me into
contact with
effective
people, whom you are welcome to include in your real estate
circle.

One more thing:
I've cultivated some relationships and developed some little known
procedures
that can save you thousands of dollars when you invest in Austin real
estate.
I know how to help you optimize your investment. I hope my diligence
will
cause you to employ me to sell your property when that time
comes.
In the meantime, I aim to please so you will enthusiastically refer others
to me.